US President Donald Trump has ordered all federal agencies to immediately stop using technology developed by Anthropic. He announced the decision on Truth Social on Friday. “We don’t need it, we don’t want it, and will not do business with them again!” Trump wrote.
The directive escalates a bitter dispute between the White House and the AI company. Anthropic refused to grant the US military unrestricted access to its artificial intelligence systems. Defense Secretary Pete Hegseth responded by labeling the company a “supply chain risk.” No American firm has ever faced that designation in public before.
Anthropic said it will challenge any such move in court. The company warned that the designation would lack legal merit and establish a troubling precedent for businesses negotiating with Washington.
Clash Over Military Access to AI Tools
The confrontation followed days of tense exchanges between Anthropic chief executive Dario Amodei and Hegseth. Anthropic raised concerns in recent months about potential government applications of its AI products. The company specifically warned against mass domestic surveillance and fully autonomous weapons.
Hegseth and Pentagon officials insisted that Anthropic must accept “any lawful use” of its tools. Hegseth announced on X that the government would immediately impose the supply chain risk label. That action would prohibit defense contractors from conducting commercial activity with Anthropic.
Anthropic said Friday evening that it had not received formal notification from the White House or the military about the negotiations. The company nonetheless rejected the pressure campaign. “No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons,” Anthropic said.
Trump uses “Department of War” as an alternative name for the Defense Department.
Federal Phase-Out Within Six Months
Trump instructed agencies to remove Anthropic’s systems from all government operations within six months. Anthropic said the decision will primarily affect companies that also hold Pentagon contracts. Those firms may need to discontinue Anthropic tools for defense-related work.
Before Trump issued his order, Anthropic pledged to ensure a smooth transition if the Defense Department chose another provider.
Trump criticized the company sharply on social media. He warned that Anthropic must cooperate during the transition period. He threatened to use the “Full Power of the Presidency” to compel compliance. He cited possible civil and criminal consequences if the company failed to cooperate.
Anthropic has supplied AI systems to US government and military agencies since 2024. It became the first advanced AI company to deploy tools in agencies handling classified material.
Industry Reaction and OpenAI’s Position
The standoff drew reactions across the technology sector. Sam Altman, chief executive of OpenAI, expressed support for Amodei’s stance. He told staff that OpenAI maintains similar red lines regarding military use of its technology.
In an internal memo, Altman wrote that OpenAI would reject any military application that violates the law or exceeds cloud deployment limits. He cited domestic surveillance and autonomous offensive weapons as unacceptable uses. He later confirmed on X that OpenAI reached an agreement with the Department of War to deploy AI models on classified cloud networks.
Amodei built his reputation as an early OpenAI executive. He left the company with several colleagues after disputes with Altman. The group founded Anthropic and now competes directly with OpenAI for enterprise and government customers. Both companies develop AI chatbots, agents, and business tools.
Altman wrote that he does not fully understand how the dispute escalated. He questioned Anthropic’s earlier arrangement with the Pentagon and Palantir Technologies. He stressed that the conflict now affects the entire AI industry.
Legal Threats and Strategic Stakes
Hegseth summoned Amodei to Washington, DC on Tuesday as tensions intensified. The meeting ended with two ultimatums if Anthropic refused full access to its systems. Hegseth threatened to invoke the Defense Production Act. That law would allow the government to use Anthropic’s products at its discretion. He also reiterated his intention to apply the supply chain risk designation.
By Thursday, Amodei said he would rather end cooperation with the Pentagon than accept those conditions.
A former Defense Department official said Anthropic appears to hold the stronger position in the dispute. The former official argued that the confrontation provides favorable publicity for the company. He added that Anthropic does not rely heavily on the $200 million Pentagon contract.
Anthropic recently secured a valuation of $380 billion. Analysts based the figure on current revenue and projected future earnings.
The former official described the Pentagon’s legal arguments as extremely weak. He said the threats to invoke the Defense Production Act or impose the supply chain risk label rest on flimsy grounds.
